It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong.Markets are designed to allow individuals to look after their private needs and to pursue profit. It's really a great invention and I wouldn't under-estimate the value of that, but they're not designed to take care of social needs.
George Soros

Thursday, January 3, 2013

Michael Zink, head of Citibank for Asean and Singapore country
officer, laughs as he catches himself quoting yet again his
grandparents. “May be I should write a book—“What I Learned from My
Grandparents.”
Indeed, when it came to the subject of financial literacy, Zink,
who has a Master in Business Administration degree from the Kellogg
School of Management at Northwestern University in Illinois, United
States, seems to have learned most of the basics of prudent money
management from his grandparents before he read his first business
textbook and got acquainted with well-known financial experts.
Zink was in the Philippines recently for the two-day
Citi-Financial Times Financial Education Summit 2012 that discussed how
to make both young and old more money savvy and ways to enhance their
knowledge and capability on financial matters.
The Citibank officer points out that, while the world is seeing
growing affluence, some 2.5 billion people, roughly a third of the seven
billion total population, are not in the banking system. Asia, the most
populous continent, is home to 1.5 billion of these people.
“More and more people in Asia are affluent, becoming middle class
and dealing with (financial) issues,” Zink says. “We have to educate
people to act responsibly.”
Zink adds one of the things he learned from his grandparents is “common sense is not so common.”
Good husbanding of resources, particularly money, is supposed to
be one of the things elders teach their kids. But with modern families
increasingly fragmented (in Asia, overseas employment has left children
without parents and/or grandparents), who will and can impart valuable
wisdom on money matters so people do not “invest” hard-earned cash in
alleged pyramiding scams like Aman Futures, Rasuman and several others
that came to light recently? And what if the elders themselves do not
know any better?
Besides, the suspected pyramiding and Ponzi scams drew adult
investors who were not exactly uneducated. They were teachers,
policemen, soldiers, businessmen, even local government officials.
Zink says this was why “(government) regulators are telling banks
they have a responsibility to make sure clients know what they are
buying. (Banks) have to know if clients understand what they are
‘buying’ (in terms of services and products).
“One of the ‘unfortunate things’ resulting from the financial
crisis is that people think that debt is bad and that’s unfortunate
because debt, if thoughtfully used, can be helpful. (For instance, if
there is no) mortgage, most people will not be able to build a house if
they just rely on savings.
Credit card, if used wisely, also provides (the things people need),” Zink says.
“(People take on) debt without understanding the consequences.
Young people do not see the consequences (of using a credit card), only
the benefits so banks have to help them understand that a card is a
handy tool if used wisely.”

MICHAEL Zink, Citibank head for Asean

Not simply greed
As for those who fall for get-rich-quick or
high-and-quick-return-on-investment schemes, the Citi banker points out
that it was “not necessarily greed that drives them but needs, so when
somebody makes an attractive offer they will consider it.” People need
things to make life easier for them and their loved ones.
Zink also admits that banks, which traditionally seemed imposing
and intimidating to ordinary people, have to “soften” its image and find
ways to make access easier so people will turn to them and not be
easily conned.
But Zink stresses financial education was not a one-person or
one-sector act. Various groups have to be involved in educating people
on financial matters, he says.
The 200 or so delegates from about 30 countries who came to
Manila for the financial education summit were sharing best practices on
how to teach financial literacy and how to bring the information to
more people.
“The world is changing quickly, (it is) very dynamic so (we) have
to set benchmarks,” Zink says. He cites an observation that more data
were being generated now in one day than in the whole 2002.
If affluence was creating new problems, the evolution of
technology was also “shifting challenges”, he says. The generational
divide, he adds, is resulting in a situation where the young are
teaching their elders. “Adults have to keep up with digitally savvy
kids,” he notes.
The banker points out, however, that while information is
ubiquitous, “wisdom is still rare. We have to learn to cut through this
ocean of data, have to distinguish what is useful, have to understand
where kids get their information” and what information could be shared.
Gun-less crimes
He says, in today’s world, there are bad guys out there stealing
information. “Criminals don’t need guns to steal, information is
floating out there,” Zink stresses.
Nobody really knows who is actually seeing the stuff shared on Facebook, he adds, so people have to be informed.
He says part of a banker’s job is to protect people’s personal
data, but it is a shared responsibility of regulators, community, banks
and other stakeholders.
He mentions “a great program to teach teachers (how to teach
financial literacy)” in Singapore because “discussions that used to
happen around the dinner table do not happen anymore. (We) have to find a
way in into that conversation.”
Citing another lesson from his grandparents, Zink sums up the
plain and simple message of financial education as “living within one’s
means.”
Although most of the people Citibank’s financial education
program was trying to reach were not its clients—at least not yet, Zink
says Citi had always adapted to a changing world. “Citi is 200 years
old. (It has) survived because it recognizes the world is changing and
(there is a) need to shift. It is a matter of knowing when it is time to
shift because of the change.”